Aiming for flexibility, Forest City Enterprises buys out Arizona Retirement System, 75% equity partner in stalled B2 tower, seemingly at a discount
Last month, I noted that the ASRS, a potential loser regarding B2, and suggested that it remained in question whether the state agency did appropriate due diligence regarding the untested--and now highly-contested--modular process.
(The Greenland Group, the Chinese investor in the rest of Atlantic Yards, except for the arena, was not mentioned by Forest City, but it's not unlikely they get involved in a later stage.)
"We felt it was prudent to make this incremental investment now, rather than cloud the future of the fund as a result of litigation related to a single property," said David J. LaRue, Forest City president and chief executive officer. "In addition, because this investment makes Forest City the 100 percent equity owner of B2, we will have greater flexibility as we drive to restart work at the building site and the modular factory, and to get the hundreds of affected men and women back to work.
Forest City and ASRS have formed a $400 million residential development fund, and continue on other buildings.
"Our relationship with ASRS continues to be very strong, and both organizations remain bullish on the Brooklyn market," LaRue stated. "Together, Forest City and ASRS continue to move the fund forward with additional multifamily opportunities in core markets around the country."
Of course we don't know exactly what happened in the negotiation between Forest City and ASRS. The whole point of setting up the fund was to share risks, so this is a reversal--though it's said to be a prudent one--for Forest City.